Real Estate Glossary
Real Estate Glossary
Amended Value– The actual sale price after the seller successfully markets and sells his or her home through the broker of his or her choice. The sale is turned over to a third-party relocation company for closing, and the guaranteed offer is amended or changed.
Amortization– Amortization is the payment of principal on a liability (including a mortgage), or the write-off of a non-depreciable asset over a scheduled term of years.
Application Fees– Fees that mortgage companies charge buyers at the time of written application for a loan; for example, fees for running credit reports of borrowers, property appraisal fees, and lender-specific fees.
Appraiser– An Appraiser is an expert who renders an opinion of value. Generally, an appraisal is performed on behalf of a bank in the process of evaluating a property for a mortgage. The reason for an appraisal is to insure that the property, which is security for the loan, has adequate value to meet bank requirements.
As-Is– A contract or offer clause stating that the seller will not repair or correct any problems with the property. Also used in listings and marketing materials.
Assessment– An Assessment is an extraordinary payment called for by the board of directors of a co-operative or condominium building for the purpose of making a capital improvement, or to provide some other essential service for which funds in the reserve account are inadequate.
Assumable Mortgage– One in which the buyer agrees to fulfill the obligations of the existing loan agreement that the seller made with the lender. When assuming a mortgage, a buyer becomes personally liable for the payment of principal and interest. The original mortgagor should receive a written release from the liability when the buyer assumes the original mortgage.
Balloon Mortgage– A Balloon Mortgage is one which matures with a balance still owed at the end of the term.
Board Approval– Board Approval is a condition in the bylaws of a co-operative requiring that the seller obtain approval from the Board of Directors as a prerequisite to transferring the shares or, in the case of a condominium, obtaining a waiver of the right of first refusal.
Building Codes– Building Codes are regulations established by the state or city government stating fully the structural requirements for a building.
By-Laws– By-Laws are the rules by which the co-operative corporation and condominium association operates.
Cancellation Clause– A Cancellation Clause is a provision in a lease or other contract which confers upon one or more of the parties to the lease the right to terminate the party’s or parties obligations thereunder upon the occurrence of the condition or contingency set forth in the said clause.
Capital Improvement– A Capital Improvement is a permanent improvement to real estate, usually extending the useful life and value of a property.
Certificate of Occupancy– A Certificate of Occupancy (“C of O”) is a document issued by a government authority certifying that a building is ready and fit for occupancy (Likewise, “TCO” or Temporary Certificate of Occupancy).
Co-brokerage– Co-brokerage is an agreement between two brokerage firms to share listings and commissions. This is usually used when one of the brokers is the seller’s exclusive listing agent and the other broker represents the buyer.
Co-operative– A Co-operative is a corporation that owns a building. Purchasers receive shares of stock in the corporation, and a Proprietary Lease for their apartment.
Collateral– Collateral is the security put up in exchange for a loan. It can be taken by the lender if the loan goes unpaid.
Commitment Letter– A Commitment Letter is the letter issued by a lending bank which legally binds it to provide funds as specified subject to written terms and conditions.
Condominium– A Condominium is an apartment building in which each apartment owner owns his or her own apartment plus a percentage of the ownership of the common areas of the entire property. Each owner receives a unit deed, proof of that ownership.
Condominium Apartments– Unlike cooperatives, condominiums are owned outright as actual property. At closing, the buyer receives a deed to the apartment. Each owner is billed directly and is responsible for making individual real estate tax and mortgage payments, if any. The common charges for maintenance and upkeep are billed to owners on a monthly basis.
Condop– Usually, a condop refers to a residential co-op that is operated pursuant to “condo style” rules (Alternatively, this term refers to a hybrid form of co-op/condo ownership designed to shelter income, from commercial space owned by the building, for example).
Contract– A Contract, also known as a Purchase of Sales Agreement, is a written agreement between seller and purchaser in which the purchaser agrees to buy certain real estate and the seller agrees to sell upon conditions and terms set forth therein.
Conversion– Conversion is a change in ownership type or status. Example: A rental housing building may be converted to co-operative or condominium ownership. A commercial loft building may be converted into residential apartments.
Cooperative Apartments– Cooperative apartments represent approximately 70% of all resident-owned real estate in Manhattan. Instead of purchasing the residence outright, the co-op buyer purchases a certain number of shares in a corporation. These shares entitle the buyer to a proprietary lease, affirming the buyer’s right to occupy a specific apartment. Tenants/shareholders of a co-op pay a monthly maintenance, based on the number of shares, to cover real estate taxes, the building’s mortgage, employee salaries, and overall building maintenance.
Covenant– A Covenant is an agreement written into deeds promising performance or nonperformance of certain acts or stipulating certain uses or non-uses of the property.
Deed Restriction– A Deed Restriction is an imposed restriction in a deed for the purpose of limiting the use of the land.
Default– Default is the act performed by either the buyer or seller that breaches the contract of t sale and permits a claim for damages.
Earnest Money– Earnest Money, also known as a Deposit or Down Payment, is made by a purchaser of real estate as evidence of good faith.
Easement– An Easement is an interest in land/property owned by another that entitles its holder to a specific use or enjoyment.
Escrow– Escrow is the means by which money (a deposit or down payment) is held by one person in trust for another, for the purpose of assuring performance under an agreement. Normally, in a residential real estate sale, the attorney for the seller is the “escrow agent” for the deposit money securing the deal until closing.
Exclusive Right to Sell Agreement– Exclusive Right to Sell Agreement is an agreement between a broker and a seller which designates the broker as the seller’s sole representative. Under this agreement, a commission is due to the broker even if the apartment is sold directly by the owner.
Financing Loan– A Financing Loan is secured by personal property. The stock and lease of a co-operative corporation constitute such personal property. Real estate brokers often refer to these financing loans as mortgages, though technically they are not.
Fixtures– Fixtures are personal property attached to the land or improvements so as to become part of the real property.
Flip Tax– A Flip Tax is a levy issued on the transfer of ownership by a co-operative corporation or condominium association against either the buyer or seller.
Grantee– The Grantee is the party to whom the title to real property is conveyed.
Landmark– A Landmark is a designation given to a building which places it under protection for the purpose of preservation.
Lien– A Lien is a legal right or claim upon a specific property which attaches to the property until a debt is satisfied.
Listing– A Listing is the term used by brokers for an apartment for sale after it has been “listed” by the broker in its system.
Listing Agent– A Listing Agent, also known as the Exclusive Broker, is the broker who represents the interests of the seller.
Loft Buildings– With large open spaces and high ceilings, loft buildings are typically found in former commercial manufacturing and office districts. As a result, they are more numerous in downtown Manhattan and parts of Brooklyn, although many new “Loft-style” apartments are being developed city-wide.
Low-Rise/Tenement Buildings– Among the most affordable housing options in New York, low-rises are five or six-story buildings, usually without elevators or doormen, and with few, if any, amenities.
Luxury High-Rise Buildings– More recent in vintage, today’s modern towers offer expansive views from very high floors, with floor-to-ceiling glass and state-of-the-art systems and amenities.
Maintenance– Maintenance is the monthly charge paid by the co-operative tenant/shareholders to cover the building’s operative costs, real estate taxes and debt service on the building’s underlying mortgage.
Market Value– The Market Value is the most probable price that a property should bring if exposed for sale in the open market for a reasonable period of time, with both the buyer and seller aware of current market conditions, neither being under duress.
Mortgage Broker– A Mortgage Broker is the real estate professional who represents an array of banks seeking to issue mortgages. This person meets with a customer, assists with the mortgage application and effectuates the mortgage process on behalf of the borrower and the bank. Generally, the mortgage broker is paid a fee by the bank for this service.
Net Worth– Net Worth is one’s assets, less one’s liabilities.Liquid net worth (that which is cash or can be immediately converted to cash) is what cooperatives focus on.
Offering Plan– An Offering Plan, also known as a Prospectus, is a document issued by a sponsor in the process of converting a building to cooperative or condominium ownership (or developing a new building). Its purpose is to provide full disclosure of all relevant data associated with evaluating an investment in the property.
Points– Points are a payment made to a bank as consideration for issuing a mortgage. These are usually based upon a percentage of the loan amount.
Postwar Buildings– Built after World War II, postwar buildings offer spacious, well-planned apartments with L-shaped living areas, wide picture windows, good closets, and air-conditioning. They rarely exceed 20 stories in height.
Power of Attorney– Power of Attorney is a written instrument duly signed and executed by a person who authorizes an agent to act on his/her behalf to the extent indicated in the instrument.
Pre-payment Clause– A Pre-payment Clause is a clause in the mortgage which gives a mortgagor the privilege of playing the mortgage indebtedness before it becomes due.
Prewar Buildings– Built prior to World War II, prewar buildings often have larger and wider rooms and commonly feature fireplaces, hardwood floors, high ceilings, and moldings.
Proprietary Lease– A Proprietary Lease is the lease issued by a co-operative corporation to each tenant/shareholder prescribing the right to occupy a specific apartment pursuant to guidelines mandated by the building.